Non Profit - Sale of Land

[spanel]

I have a client (not for profit) that has a few acres that they want to sell to another local non profit. As far as I can tell, this will not be taxable to them.

Any input is welcomed.

Thanks

Chris

[Roland Slugg]

You are correct, provided that the land was not encumbered by acquisition indebtedness or any other loans at any time during the taxable year. If the land was encumbered by debt, part of the gain on its sale will be UBTI. The taxable/nontaxable nature of an EO's income, including UBTI, is covered by Code §511, §512, §513 and §514 and related Regs.

If there is UBTI, the EO should file Form 990-T.